Off-Highway Vehicle Engine Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

The Off-highway Vehicle Engine market was valued at USD 37.21 billion and is expected to reach USD 54.67 billion over five years by registering a CAGR of 6.79% during the forecast period.

The COVID-19 pandemic has hindered the growth of the off-highway vehicle engine market due to trade restrictions imposed by various governments worldwide. Off-highway vehicle sales have declined due to the global outbreak of COVID-19, resulting in a decline in off-highway vehicle engine sales. However, post-pandemic, due to the easing of the lockdown globally, there has been an increase in the production and sales of Off-highway vehicles, which also results in the increasing production of engines for off-highway vehicles.

Off-highway vehicle engine growth depends on the growth rate of agricultural and construction machinery industries. Rising agriculture mechanization trends in developing countries and a spike in residential and commercial construction projects globally are driving the construction and agricultural machinery markets.

An increase in demand and production of off-road vehicles is projected to boost the off-highway engine market during the forecast period. Moreover, a rise in automation in various industries such as agriculture, construction, mining, infrastructure, and others has increased the use of off-road vehicles in these sectors.

However, high cost and maintenance expenditures are anticipated to restrain the off-highway engine market significantly. Regulatory bodies are imposing rigorous norms globally to reduce carbon emissions from automobiles. Off-highway Engines can be modified to reduce carbon emissions from vehicles. This is estimated to drive the off-highway engine market.

At the global level, construction is anticipated to be one of the most profitable sectors over the next decade. The recovery of the Asia-Pacific construction industry improved business in the mining and quarrying sectors, and a favorable economic environment with low-interest rates is likely to stimulate investments in the market further. Extensive modernization of agriculture by incorporating mechanization of farming practices is primarily to drive demand for off-highway engines across Asia-pacific during the forecast period.

Off Highway Vehicle Engine Market Trends

Increasing Electrification of Off-highway Vehicles

Off-highway heavy-duty vehicle electrification is increasing, and OEMs are eager to learn how this new trend can complement their existing business models. The trend toward electrification of vehicles is expected to gain traction in the coming years, with factors such as battery technology, supply, and overall economics favoring electric vehicles. The adoption of electric solutions is influenced by charging infrastructure, battery technology, and total development cost. Off-highway vehicle electrification ensures long-term cost savings due to reduced maintenance and fuel consumption.

As technology advances and farming becomes more scientific, consumers turn to these tools to save time and money. Off-highway engines are being driven by their utility and cost-effectiveness in a variety of applications. Moreover, medium-sized combine harvesters with an average length of 4.8m, a width of 2.2m, and a height of 2.8m have been widely used in rice fields, particularly in ASEAN countries such as the Philippines, Indonesia, Vietnam, and India. Kubota Corporation and Yanmar Co. Ltd. are two prominent suppliers of medium-sized combine harvesters in the Asia-Pacific market.

India is one of the emerging agricultural markets, with consistent demand for more than 50 hp tractors over the last three years, owing to strong government support for Indian farmers in purchasing agrarian machinery in order to achieve a high agricultural economy and rapid improvement in the tractors industry.

Asia-Pacific Region Likely to Dominate the Global Market

Despite volatile growth in the real estate sector, significant development of rail & road infrastructure by the countries across the Asia-pacific region to withstand the demand stemming from the growing industrial and service sectors has resulted in significant growth of the construction industry in recent years. These rising infrastructural activities elevated the necessity of off-highway vehicles, and such demand for their engines picked up momentum simultaneously.

As the construction industry is dominated by both state-owned and private enterprises, increased government and private spending in this area are propelling the industry to global dominance. Over the forecast period, the market for excavators and other types of construction machinery is expected to grow in countries such as India, China, and Japan. Furthermore, rising global marine traffic and the development of a significant warehousing industry in China are expected to create a large market for off-highway engines.

Additionally, with the increasing investments in public infrastructure, renewable energy, infrastructure, and commercial projects, the off-highway vehicle engines segment is expected to record growth at a moderate pace over the next five years, thereby improving both consumer and investor confidence.

Such factors are expected to increase the demand for high-performance equipment in the country, thus driving the off-highway engine market.

Off Highway Vehicle Engine Market Competitor Analysis

The Off-highway Vehicle Engine Market is moderately consolidated as the majority of market shares are captured by some of the major players, like Yanmar Co. Ltd, Cummins, Deutz AG, Man Engines & Components Inc., Deere & Company, Caterpillar Inc., Volvo Penta, etc. The players operating in the market are focusing on various growth strategies to gain a competitive edge over other players. For instance,

• September 2022: Guangxi Yuchai Machinery Group Co., Ltd. showcased its products at the 19th China-ASEAN Expo. Yuchai displayed the YCK08 diesel engine, which meets China 6 emission standards, in the outdoor exhibition area for intelligent equipment (construction machinery and vehicles).

Caterpillar Inc, Komatsu, Volvo CE, Hitachi Construction, John Deere, and Others are some of the key players in the market.

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